Market Wrap May 2025
April: Global Markets Sell Off
- Extreme volatility gripped global markets in April as President Trump announced new tariff measures on a host of countries on Liberation Day. Markets rebounded strongly as trade tensions eased towards month end.
- Australian shares initially dropped sharply following the announcement of new US tariffs but subsequently rebounded strongly as trade tensions eased, ultimately ending the month up +3.6%.
- Global Shares on an unhedged basis saw steep declines early in the month due to escalating US tariffs and retaliatory trade measures. Despite rebounding late in the month as trade tensions eased, global shares delivered a return of - 1.8% for the month of April.
- Global small caps equally experienced steep declines early in the month as investors took risk off the table in favor of safer assets. As trade tensions eased, Global small caps rebounded, ending the month at -1.9%.
- Global emerging markets outperformed developed markets for the month due to compelling valuations and policy support.
- Global listed Property (hedged) sector returned -0.4% outperforming the broader equity markets.
- Listed Infrastructure (hedged) sector held up relatively well, returning +0.2% over the month due to the sector’s perceived defensiveness.
- Fixed income markets performed strongly in April, with both Australian bonds and Global bonds, delivering positive returns for investors.
- The Australian dollar AUD was up meaningfully against USD as investors anticipate further weakness in the greenback, due to US policy and economic risks.
Job Market:
U.S.
- The annual unemployment rate was unchanged at 4.2% in April 2025. The number of unemployed individuals increased to 7.2 million.
- The jobs market remains resilient in the U.S. Non-farm payrolls rose by +177,000 in April, surpassing expectations. Furthermore, Labor force participation ticked up slightly to 62.6%.
Locally
- The Consumer Price Index (CPI) in Australia rose 2.4% in the 12 months to March 2025. The top contributors were Housing (+1.7%), Education (+5.2%), and non-alcoholic beverages (+1.2%).
- Australia's seasonally adjusted unemployment rate remained steady at 4.1% in March 2025. The labor force participation rate increased slightly to 66.8%.
Major Asset Class Performance
| Asset Classes | 1 Month % | 1 Year % | 5 years (p.a.) % |
|---|---|---|---|
| Australian Shares | 3.6 | 9.8 | 12.1 |
| Australian Small Companies | 1.8 | 3.7 | 7.7 |
| Global Shares (Unhedged) | -1.8 | 13.9 | 14.5 |
| Global Shares (Hedged) | -0.5 | 9.8 | 13.0 |
| Global Small Companies (Unhedged) | -1.9 | 7.5 | 11.3 |
| Global Emerging Markets (Unhedged) | -1.3 | 10.6 | 6.8 |
| Global Listed Property (Hedged) | -0.4 | 9.0 | 4.3 |
| Listed Infrastructure (Hedged) | 0.2 | 14.9 | 6.9 |
| Australian Fixed Income | 1.7 | 7.1 | -0.2 |
| International Fixed Income | 1.0 | 6.5 | -0.6 |
| Cash | 0.4 | 4.5 | 2.2 |
Source: Lonsec iRate, Rhombus Advisory, 30 April 2025
Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets
(unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property
(hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Listed Infrastructure (hedged); FTSE Global Core Infrastructure 50/50 NR Index (AUD Hedged)
Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate
Total Return Index Value Hedged AUD
Please note: Past performance is not indicative of future performance.
Currency Markets
| Asset Classes | 1 Month % | 1 Year % | 5 years (p.a.) % |
|---|---|---|---|
| AUD / USD | 0.64 | -1.1 | -3.2 |
| AUD / GBP | 0.48 | -0.7 | -5.1 |
| AUD / EURO | 0.57 | -2.2 | -5.5 |
| AUD / YEN | 91.70 | -2.2 | 0.0 |
Source: Lonsec iRate, Rhombus Advisory, 30 April 2025 All foreign exchange rates are rounded to two decimal places where appropriate.
Please note: Past performance is not indicative of future performance.
